In 2022, despite a severe bear market, numerous nations across the globe witnessed more financial losses due to cryptocurrency fraud. Hong Kong, for instance, reported a significant increase in losses as a result of cryptocurrency scams. According to local police reports, such losses reached 1.7 billion Hong Kong dollars ($216.6 million) last year, up by 106% from the preceding year.
The South China Morning Post revealed that the number of cryptocurrency-related fraud cases recorded in Hong Kong in 2022 was 2,336, an increase of 67% over the 1,397 cases reported in 2021.
Official statistics from the Hong Kong police CyberDefender website indicate that more than 50% of the total 3.2 billion HKD ($407 million) taken from city residents in technological crimes in Hong Kong involved cryptocurrencies. In the previous four years, online fraudsters made roughly 3 billion HKD annually, which is a comparable sum. In total, around 23,000 documented incidents of technology-related crimes were committed in 2022.
According to SCMP sources, criminals are increasingly using cryptocurrencies to carry out online scams since they can conceal their identities, the flow of their transactions, and the recipients of their proceeds. According to a source inside the industry, the usage of cryptocurrency in online crimes has made it harder for law enforcement to trace down illegal cash.
The cybersecurity and technology crime department of Hong Kong police has characterised typical cryptocurrency fraudsters as posing as highly knowledgeable investors in crypto assets, precious metals, or foreign exchange goods. They frequently pressure their victims into installing fake investment software that displays false transactions and returns.
Publication of the report coincides with Hong Kong’s government getting more involved in the infrastructure development for cryptocurrencies, setting Hong Kong’s approach to crypto regulation apart from China’s total ban on cryptocurrencies that took effect in 2021. The latest planned licensing scheme for cryptocurrency exchanges, which is expected to go into effect in June 2023, was the subject of a public comment request from Hong Kong’s Securities and Futures Commission in February.